Fixed fee offers undercutting October’s power value cap

A number of energy providers have launched new one-year fixed-rate energy tariffs which undercut October’s rising energy price cap. 

British Gas, EOn Next and Outfox The Market have unveiled deals which, on an annual basis, fall below £1,717. 

Locking into a one-year fixed rate deal could help some households save money on their energy bills. 

Most households are currently on a standard tariff, with prices dictated by the energy price cap.

Rates: Locking into a one-year fixed rate deal could help some households save money on their energy bills

The Outfox the Price Cap (Oct 24) Fix’d Dual v1.0 deal is the cheapest one-year fixed tariff on the market at present, at £1,600, which is £117 less than the price cap, Uswitch.com said. 

EOn Next’s Gust 12m v11/Next Fixed 12m v26 deal is the second cheapest one-year fixed rate deal on the market, at £1,626, Uswitch told This is Money. 

The British Gas Fixed Tariff 12M v15 comes in at £1,627, which is £90 cheaper than October’s energy price cap. 

Ben Gallizzi, an energy expert at Uswitch, said: ‘Energy prices will rise for millions of households from October, so now is a good time to shop around for a fixed deal.

‘The current cheapest fixed deal available is from Outfox The Market, at £1,600 per year for households with average usage, which is £117 less than the October price cap.

Who is cheapest? Outfox The Market currently has the cheapest one-year fixed rate energy deal, Uswitch.com said

‘E.ON Next’s one-year fix is priced at £1,626 and offers a competitive saving of £91, making it the next best deal on the market. British Gas is offering a competitively priced one-year fix costing £1,627, which is a £90 saving.

‘There are several deals offering households a saving from October, so it’s worth moving quickly if you find one worth switching to.’

He added: ‘Although the long-term outlook for energy bills remains uncertain, further price rises are likely in January and deals could get more expensive over winter. So it’s sensible to lock in a lower rate for price certainty before rates rise.’ 

How much you pay for energy can depend on factors like where you live, as the price cap varies slightly depending on your location.

Energy price cap – what’s changing? 

On 23 August, regulator Ofgem confirmed that a typical household’s annual energy bill will rise by £149 in October under the new price cap.

This means people using an average amount of gas and electricity will pay £1,717 a year for their energy, representing a 10 per cent increase compared with now. 

The average home currently pays energy bills of £1,568 a year, with prices limited by the Ofgem price cap. 

No one knows what the next energy price cap will be, but analysts at Cornwall Insight claimed there would be a ‘further modest increase’ to energy bills when the price cap changes again in January 2025.

The price cap was brought in during January 2019 to stop energy firms overcharging customers on variable-rate tariffs. 

Energy bills are rising because of the increasing cost of wholesale energy – the gas and electricity bought by energy firms that then sell onto consumers. 

Higher energy bills are a blow to hundreds of thousands of pensioners, who will no longer get Winter Fuel Payments worth up to £300 a year due to chancellor Rachel Reeves’ sweeping cutbacks.